OBG talks to Qiu Jianlin, Chairman, Zhejiang Hengyi Group

Interview

Interview: Qiu Jianlin

Hengyi’s Pulau Muara Besar Petrochemicals Project is the largest overseas venture for a private Chinese firm. Why did you choose Brunei Darussalam?

QIU JIANLIN: We conducted a thorough site selection process for our overseas refinery and integrated aromatics project. We visited several potential countries, but in the end we chose Brunei Darussalam based on the following reasons. First, risk management is our top priority when choosing the site for such a big proposal. Politically and economically Brunei Darussalam has shown itself to be one of the best locations for foreign investment. Second, there is a perfect synergy with Hengyi for such a project. The Bruneian government has decided to diversify their energy assets into downstream industries as one of the country’s long-term strategies, therefore, we immediately identified an opportunity. Third, the bilateral relationship between Brunei Darussalam and China has been very friendly for many years. Our activities can play a very important role in enhancing strong ties between the two countries.

What is the timeframe for the project to come online and reaching full production capacity?

QIU: We plan to execute our project in two phases. Considering our own engineering capacity and the availability of local support, the risks can be minimised if we can implement our plans in two stages. The first phase will be focused on refinery and aromatics units. The second phase will entail doubling capacity. On top of that, we will have an ethylene cracker and a few derivative petrochemicals plants. The first phase is set to commence at the end of 2015, and the second planned to start at the end of 2018.

As a foreign company investing massively in Brunei Darussalam, how would you rate the regulation for foreign investors in the downstream segment?

QIU: As a foreign investor I would say restrictions are quite limited, as we have received immense support from the government compared with other countries. Frankly, we are not the first foreign company to come to Brunei Darussalam to propose a project in the downstream segment. Our predecessors failed to realise their projects not only because they could not justify their plans economically, but also because they could not deliver a winwin solution. The regulation, in my view, is in the favour of foreign investment.

What challenges have you faced so far in setting up the company and what technical challenges are expected during the construction phase?

QIU: The availability of local support has been very helpful during the construction and operation phases; therefore, the challenges have been limited. In order to facilitate project execution, certain design works were completed in China by well-known engineering companies. As for construction tasks, modularised construction must be well planned in detail and in this regard we will engage local construction service providers as far as possible. For certain specialised tasks that require specific technical skills, we will engage international companies to work in partnership with local companies. By doing this, local companies will be able to upgrade their technical service capacity. In the long term, we can benefit from a more competitive petrochemicals service portfolio.

With downstream diversification being a key priority, what are the expectations of this investment?

QIU: We are working closely with the Brunei Economic Development Board to explore potential developments that could benefit both parties. Our second phase will provide the opportunity for the country to establish a complete petrochemicals value chain. The ethylene cracker is the basis for a petrochemicals industry. Without its construction, downstream diversification will be difficult to realise. There are many options for developing our second phase. We will definitely design our plans around Brunei Darussalam’s best interests and ensure Hengyi presents a win-win option.